USD/JPY is expected to trade with bearish bias as key resistance is at 121.45. Overnight, US stock indices settled with broad gains, lifted by shares in telecoms and consumer staples sectors. The Dow Jones Industrial Average rose 0.6% to 17,368, the S&P 500 gained 0.5% to 2,021, and the Nasdaq Composite was up 0.4% to 4,952.

Nymex crude oil also rebounded, gaining 1.9% to $36.31 a barrel, while gold was down 1.0% to $1,063 an ounce. Meanwhile, the benchmark 10-year Treasury yield climbed up to 2.225% from 2.139% Friday.

At the same time, the US dollar edged lower as investors positioned for the Federal Reserve's interest rate decision later this week. The Wall Street Journal Dollar Index fell 0.1% to 89.68. EUR/USD was broadly flat at 1.0990, while USD/JPY was up 0.1% to 121.02, while AUD/USD rose 0.8% to 0.7241 and NZD/USD was up 0.5% to 0.6754. The pair sank to as low as 120.30 before posting a rebound overnight. Though it is currently continuing with the rebound and trading above the 20-period (30-minute chart) and 50-period moving averages, it remains capped by the key resistance at 121.45. As long as 121.35 is not surpassed, the pair is expected to post choppy price actions with a bearish bias. The first downside target is set at 120.30 (yesterday's low) and the second one at 119.60 (last seen on October 22).

Trading recommendations:

The pair is trading below its pivot point. It is likely to trade in a lower range as long as it remains below the pivot point. Short positions are recommended with the first target at 120.30. A break of that target will move the pair further downwards to 119.60. The pivot point stands at 121.45. In case the price moves in the opposite direction and bounces back from the support level, it will move above its pivot point. It is likely to move further to the upside. According to that scenario, long positions are recommended with the first target at 121.85 and the second target at 122.25.

Resistance levels: 121.85 122.25 122.70

Support levels: 120.30 119.60 119